A Dynamic Analysis of Tied Aid
In this paper we examine the impact of tied aid on capital accumulation and welfare in the presence of a quota on imports. Using a simulation model we establish that tied aid can lower the relative domestic price of the manufactured good and therefore reduce the stock of capital. In the presence of a strong production externality from capital accumulation and high tying ratio, tied aid may immiserize the recipient country.
|Date of creation:||2007|
|Publication status:||Published in Sajal Lahiri. Theory and Practice of Foreign Aid, Elsevier, Amsterdam, pp.173-183, 2007, Frontiers of Economics and Globalization|
|Note:||View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00270896|
|Contact details of provider:|| Web page: https://hal.archives-ouvertes.fr/|
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